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Rising oil prices and booming natural gas production has drawn much attention to energy sector over the last few years — even if it’s not all wanted. While battles have raged over pipelines, gas prices and fracking rights, the latest game of cat-and-mouse stems from “activist” investor Carl Icahn’s bid to enter the refining business.

After failed bids to acquire filmmaker Lions Gate Entertainment (NYSE:LGF) and gain board seats at consumer products giant Clorox (NYSE:CLX), the corporate raider has turn his attention to Sugar Land, Texas, refiner CVR Energy (NYSE:CVI). Icahn plans on buying the 100-year-old company then selling it later on to one of the major refining firms.

Naturally, the board at CVR hasn’t exactly been thrilled with the investor’s hostile bid and soon adopted a poison pill defense.

While the proxy battle could go on for months, the real question is whether CVR is worth Icahn’s — or other investors’ — time.

A ‘Sweet Spot’ Refiner

After gaining at 14.5% stake in the company, Icahn has offered to pay shareholders a total of $2.26 billion, or $30 per share, for the refining firm. So far, shareholders had tendered about 55% of the refiner’s outstanding shares to Icahn in response to the bid. In response, CVR launched a provision that if any investor gains ownership of more than 15% of the company, the board may issue additional equity to dilute the acquirer’s stake and stop them from gaining control. Icahn countered by saying if the board doesn’t decide in his favor, that “we will seek to hold them accountable to the maximum extent permitted by law.”

So why all the brouhaha? CVR’s main assets include a 115,000-barrel-per-day oil refinery located in Coffeyville, Kan., a 70,000-barrel-per-day refinery located in Wynnewood, Okla., as well as the necessary pipelines and gathering systems needed to operate those assets. The firm also owns the general partner and a majority of the common units of CVR Partners LP (NYSE:UAN). That MLP owns facilities that produce ammonia and urea ammonium nitrate fertilizers.

Two small refineries and an ammonium nitrate facility hardly seem worth fighting over. However, the key is where those plants are located.

As East Coast refiners like Sunoco (NYSE:SUN) have struggled under rising Brent crude prices, those with access to cheap and abundant West Texas Intermediate (WTI) have flourished over the last few years. Those refiners located inland are able to buy crude at the lower WTI benchmark — currently around $103 a barrel — and then sell gasoline at prices based on the global benchmark. North Sea Brent crude futures are currently trading northwards of $123.

That crack spread has been key to the recent success and rising profits at the inland independent refiners. CVR receives about 86% of its feed stock from WTI indexed oil. That has resulted in CVR realizing juicy gross margins per barrel of $15.13.

While CVR doesn’t feature the best refining margins of the major independent refineries, that $15 per barrel’s worth of profit is certainly attractive. Secondly, the firm’s small asset base (two refineries) and small market cap makes flipping it relatively easy. So one certainly can understand Icahn’s attraction to the firm.

However, the activist investor might have gotten ahead of himself on this one.